Abstract
The demand for electricity in the future is uncertain and difficult to forecast. But we have to forecast the demand in the future to construct power plants. In that sence a large scale power plant has a disadvantage, since it takes long to construct it. On the other hand, a small scale one is more expensive than a large scale one, although it takes less time to construct it. Therefore large and small scale power plants could complement the disadvantages of each other. In this paper we have developed a stochastic dynamic programming model to investigate the possibility. The model determines the capacities of large and small scale power plants in the uncertain demand to minimize the expected value of the total cost. Computed results have shown that small scale plants can play a significant role in the uncertain demand even if they are more expensive than large scale ones.
